Don’t neglect the Canadian energy stocks just because of the potential impact of tariffs. Indeed, a worst-case scenario may very well play out for Canada’s energy scene. That said, I still view the names as more than investable for the long term, especially for value investors who want outsized dividend yields and robust cash flow streams.
Indeed, Canada’s energy patch may make for an increasingly choppy ride this year, especially if the U.S. slaps hefty tariffs on Canadian crude. Either way, I’d treat any fear-driven spills in shares of the energy plays as more of a buying opportunity than anything else. In this piece, we’ll check out three easy Canadian stocks for investors looking to build their nest egg for the long run.
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Suncor Energy
First up, we have Suncor Energy (TSX:SU), which has remained discounted over the past several years. With the stock experiencing a bit of a breakout moment despite the threat of tariffs, I think the name may be worth buying on strength. Indeed, Suncor stands out as an energy firm that can hold up in the face of potential 10% tariffs. The company’s chief executive officer is confident his firm can handle any such levies to come.
Notably, Suncor’s refinery business looks quite sound. I’m inclined to agree with Suncor’s top boss. Tariff impact aside, I’m also a huge fan of the valuation, with shares trading at around 12.3 times trailing price to earnings (P/E). The dividend yield is also bountiful, currently sitting at 4.11%.
Just be ready for more volatility ahead, with a 1.46 beta, which entails a rougher ride than the broad TSX Index. If you want value and a higher dividend yield from such a name, though, investors will need to fasten their seatbelts and be ready to add on any near-term pullbacks between now and the coming quarters.
Canadian Natural Resources
Up next, we have Canadian Natural Resources (TSX:CNQ), which recently got downgraded over potential overvaluation concerns. Indeed, Canadian Natural has been a strong performer in the last five years, rising around 132% over the timespan, not accounting for dividends. With the stock around 20% off its highs, though, I don’t view the name as all too expensive in the slightest. Shares have not really done anything in the past year and a half.
Further, shares look like a relative value play at 12.59 times trailing P/E. Add the 4.9% dividend yield into the equation, and I view shares of CNQ as a great addition to any long-term portfolio. Of course, tariff threats are worth keeping tabs on, especially if President Trump targets individual sectors. In any case, investors must be ready for choppiness and more near-term downside (1.9 beta at writing).
The Foolish bottom line
Sure, investing in the energy patch can be rather tricky at a time like this. The key for new investors is to stay the course and be ready to add to a position should better prices come along after you’ve bought. With that in mind, SU and CNQ shares look to be worthy additions if you’re a fan of value and yield.
